In every real estate market, there are move-in-ready homes for those who want to get right to enjoying their new space and aren’t looking to do major renovations and fixer-uppers for those who want to take on a big project and customize the home to their own taste. There are pros and cons of each type, and plenty of considerations to help decide what is best for you.
Move-In-Ready Home Motivation
The best part about move-in-ready homes is just that— it’s move-in-ready! While you may want to change a few things like paint colors or light fixtures, you can start living in and enjoying the home right away. While you likely won’t need a big renovation budget, it’s still a great idea to have an emergency house fund in place in case something unforeseen happens.
The challenge that often comes with a move-in-ready home is that the sale price will be higher than a fixer-upper, as updated layouts, appliances, and fixtures come with a higher price tag. It has also often been customized with someone else’s style in mind, so there may be items that you would like to update as budget becomes available.
Fixer Upper Home Focus
If you have your new home search focused on fixer-uppers, there are plenty of positive things to look forward to. The first is the sale price—right off the bat, fixer-uppers are usually priced lower than turn-key homes of similar sizes in the same market. This can allow for a lower initial mortgage loan amount, and more budget to start renovations.
Another “pro” of a fixer-upper is potential. Many fixer-uppers are a blank slate ready to be made into your dream home. You don’t have to be Chip and Joanna Gaines to update a home to your own style, needs, and wishes. Depending on your available budget and skill, some renovations can be done on your own while others may require the help of professionals.
There can be downsides of fixer-uppers, too. The most critical are big-ticket, hidden issues like water damage, old electrical systems, or other items that might not pass inspection and will be very costly to remedy. Timing and budget can present challenges as renovating a home can take several months and numerous budget revisions to get it to the best move-in condition. Purchasing building materials and appliances one-off can also become more expensive in the long run than if each of those items was purchased together in a move-in-ready home. Shortages in building materials can also affect pricing so take the time to understand the construction market at the time you’re considering any renovations. You’ll also need to consider any alternate living situations during certain renovations. For instance, if you’re redoing the master bathroom, is there another in the house you can use? Redoing a kitchen might be easier in the summer when you can cook a lot of your food outside. Make a list of how any renovations will affect your budget, lifestyle, moving timeline, and take all of the considerations into account when making your decision.
Whether you decide on a move-in-ready home or fixer-upper, inspections are an essential part of the process to help evaluate the condition of the home and plan for things that may need to be updated. Some markets are seeing buyers skip inspections due to high demand and low inventory of homes available for purchase, but this trend could cause significant financial challenges for new homebuyers who are caught unaware of major issues or renovations needed.
What about flipped homes?
Homes that have been recently “flipped” are a version of a fixer-upper—but someone else did the work! These homes are typically bought for a low price, renovated, and sold soon after renovation for a higher price. They can fall into the move-in-ready category, but there are a few things to keep in mind when buying a flipped home.
First, inspections are important because the aesthetics of the home may be totally updated, while issues with the foundation, roof, major appliances, and land could have been overlooked or simply not addressed during the renovation. A home inspector can help to identify areas of the home that may need additional updates or repairs as many flipped homes were once in poor condition. Inspections can also provide leverage for price negotiations on flipped and fixer-upper homes if it’s revealed that additional work is needed on some of the bigger ticket items.
Also, materials used in flipped homes can be of lower quality than if you were selecting materials during your own renovation. This could be an issue if the materials do not fit your standards for style or quality; some can be changed again after purchase, or you may decide that what’s been updated works for your living situation.
The value of your home – both now and after any significant renovations – is a key consideration when making your mortgage decisions. It’s typically not wise to put more renovations into a home than the home will be worth. For example, if you buy a house for $100K in a neighborhood with an average home cost of $150K, don’t invest another $100K into renovations because there’s little chance you’d earn that back when you sell. No matter the type of home that you are looking for, the local Summit Federal Credit Union Mortgage Team can help answer your questions and get the mortgage process started. Contact us today.